Connecticut AG probing Craigslist on paid-sex ads

By IBT Staff Reporter05/03/10 AT 8:40 PM

Craigslist.com was subpoenaed on Monday by Connecticut's attorney general, who is investigating whether the popular online classified ad service is doing enough to quash prostitution on its site and whether it may be profiting from it.

Attorney General Richard Blumenthal, who is co-heading a group of 39 states looking into the matter, said in a statement that thousands of ads remain on Craigslist despite assurances from the company they would be removed.

The private company could be earning $36.3 million or more a year from prostitution and human trafficking, he said, citing published reports. Most ads on Craigslist are free except for jobs, New York brokered apartments, and U.S. adult and therapeutic services.

Blumenthal said the subpoena was issued in coordination with Department of Consumer Protection Commissioner Jerry Farrell Jr.

The Craigslist brothel business seems booming -- belying its promise to fight prostitution, said Blumenthal. We are asking Craigslist for specific answers about steps to screen and stop sex-for-money offers -- and whether the company is actually profiting from prostitution ads that it promised the states and public that it would try to block.

In a blog posted on the site, Craigslist Chief Executive Jim Buckmaster wrote that Blumenthal was once again indulging in self-serving publicity at the expense of the truth and his constituents...

As AG Blumenthal knows full well, Craigslist has gone beyond fulfilling its legal obligations, far beyond classifieds industry norms, has more than lived up to any promises it made, and working together with its partners is in fact a leader in the fight against human trafficking and exploitation, Buckmaster wrote.

The attorney general's request includes documents related to Craigslist's manual review process, which the company says it uses to remove objectionable ads, correspondence from law enforcement, and documents related to revenue from the erotic and adult services ads.

Last year, Craigslist replaced its erotic services ads with a new adult category that it said would be closely screened.

That came under intense scrutiny from state authorities after a masseuse who offered her services on Craigslist was allegedly killed by a client.

Currently, users of Craigslist's casual encounters site must click to agree that they will flag any illegal activity and report suspected human trafficking cases to authorities.

Craigslist has said it donated all revenues from its erotic services category to charity. But last year when it switched to its adult services category it said it would make no representation about how such revenue would be used.

The online site says it is used by over 50 million people in the United States, with over 20 billion monthly page views.

Buckmaster has claimed that Craigslist is unfairly targeted for its adult service ads while those posted in major newspapers are ignored.

EBay Inc is a part owner of Craigslist but the two companies are currently fighting over eBay's true stake. EBay paid about $32 million for a 28.4 percent stake in Craigslist in 2004, but later accused the company of diluting its stake.

EBay and Craiglist are awaiting a ruling from the Delaware Chancery Court.